DRIVE in any part of your city, and you will definitely come across these hoardings. Or tune into any television channel and you are bound to come across commercials urging you to secure your child's future by opting for a kid's insurance plan. As life insurance companies move towards an era of offering customised insurance plans, the idea of alluring parents to think about their child's future seems to have caught the imagination of virtually every insurance company.

"Providing quality education and ensuring a secure future for their children is the greatest priority of all Indian parents. They always want their children to have a better life than theirs, and are therefore willing to invest in such plans," says Venkatesh Mysore, Managing Director, Metlife India.

The company recently launched a policy called Met Bhavishya, which insures parents who have young children and provides periodic payouts to coincide with the different educational needs of the child. This policy, according to Mysore, is one of the company's best-selling plans.

Similarly, Vivek Khanna, Director (Marketing), Aviva Life Insurance, says that more than 15 per cent of the business through direct sales has come from the company's Young Achiever's child policy, which is just over a month-old.

Shikha Sharma, CEO & Managing Director, ICICI Prudential Life Insurance, also sees a huge potential in this segment. "We have seen that ticket sizes (annual premium) are considerably higher for our SmartKid plans, compared to other products. This seems to indicate that when it comes to their children and there is a clear benefit, people are willing to invest the necessary funds."

"In a country like India where over a third of the population comprises children under the age of 18 and where over half of the household expenditure goes towards providing for their education, career and marriage, it is imperative to get a reliable source of funding for their needs. This need to secure one's child's future and fulfil their dreams is the principal reason for the success of child insurance products," remarks Debashis Sarkar, Director (Marketing and Alternative Distribution), Max New York Life.

The target audience for most of these child policies are young parents with children in the zero-seven age group. And, in most cases, the insurance actually covers the parent, upon whose death the child gets the sum assured as well as the funds accumulated. Apart from this, most of these plans are also designed to give the child money at the specific times it is required the most, such as during his or her admission into a university and so on.

Marketing tactics

With most of the child policy plans offering almost the same features, the challenge definitely lies in how well and how differently the companies market them.

Most companies, apart from the usual media campaigns, seem to have opted for the direct marketing route in a big way.

Max New York Life, for instance, has tied up with Outlook Money, in which they have brought out a booklet titled A Layman's Guide to Insurance. "We have also tied up with the India Today Book Club, through which we have sent mailers to around 2.5 lakh members and have talked to them about the importance of opting for a child's policy," says Sarkar.

Similarly, ICICI Prudential has tied up with renowned quizmaster Derek O' Brien's KQ School Advantage, a course designed to teach children to speak well, as well as improve their general knowledge, creative skills, memory and develop good habits. Through this scheme, the company is reaching out to the parents of children enrolled in the KQ School Advantage, and is offering specialised life insurance advice on how to meet the financial needs at each stage of the child's education. "We also distributed a safety booklet and a guide to planning a child's future," says Sharma.

Talking about the company's media strategy, Sarkar of Max New York Life says, "Research has shown that nobody likes to talk about death; therefore, in our ad campaigns, we have reflected on the positive facets of life such as responsibility of the parents towards their children."

On the other hand, ICICI Prudential has structured its communications around the thought of "leaving nothing to chance" when it comes to providing for the child's future. "This has been based on the consumer insight that a parent will do everything to ensure that the child's future is secure and wants to take no chances with his/her education and happiness," says Sharma.

Challenges

Though the direct marketing teams of all these insurance companies have gone the whole hog trying to convince consumers to opt for child insurance policies, Metlife India's Mysore feels it is not that easy.

"People in India are still not too enthusiastic about insurance. And when it comes to taking child policies, one has to get into the basics and talk to them about the financial implications they are likely to face if they don't save enough for their child's education," says Mysore.

Sarkar of Max New York Life says: "The biggest challenge is to make the parent understand that each need is unique and involves its own financial/cash flow stream. The most important issue while planning a child benefit product is that the timing of insurance benefit must coincide with key milestones in the child's life."

It's just a marketing gimmick

Though the insurance companies seem to be excited about the success of their recent child insurance policy initiatives, industry experts feel there is nothing new about it.

Says R. Ramakrishnan, Retired Chief Actuary, Life Insurance Corporation (LIC): "Child plans are not new to the Indian insurance market, and have been around even before LIC came into being. The insurance companies are merely trying to market old wine in a new bottle."

A Chennai-based insurance consultant feels that policies to insure children are not suitable for the middle class. "They are aimed at high-networth individuals for tax-saving purposes. If something happens to the parent, who is going to pay the premium? Indirectly, it will be burdening the child, as any insurance claim on the father/mother's life will go towards meeting family expenses."

Though he agrees that these policies are doing well, he says, "I would any day recommend that a parent should insure his life for a higher amount, because he/she is the bread winner, rather than take a policy on his child."

He says that a reason why these policies may be popular is that they give guaranteed additions, which in these days of declining interest rates are a great attraction.

But nothing seems to be holding back the insurance companies from aggressively selling their insurance plans focused at children. The child plans, according to Max New York's Sarkar, are the first effort of the insurance companies to offer customised products.

Article E-Mail :: Comment :: Syndication